Australian Energy Producers has urged the Federal Government to make critical changes to its proposed domestic gas reservation legislation, warning that significant flaws must be addressed before the bill is passed by Parliament.
The call follows the release of a Senate inquiry report today, with the Coalition highlighting the mandatory “must sell” and artificial oversupply requirements as a risk to investment, competition and future gas supply.
Australian Energy Producers Chief Executive Samantha McCulloch said the Government must address the legislation's fundamental flaws to deliver a workable, long-term policy framework.
"A gas reservation scheme should deliver reliable and affordable gas for households and businesses while encouraging the competition and investment needed to bring new supply into the market," Ms McCulloch said.
“The current reservation design fails this test and falls short of the legislation’s own objectives.
"Requiring exporters to sell gas below cost or on non-commercial terms will undermine the investment needed to ensure future gas supply while crowding out the smaller domestic-focused producers currently supplying Australian customers"
Australian Energy Producers has proposed a series of practical amendments to the legislation, including replacing the compulsory 'must sell' requirement with a genuine offer obligation, removing the artificial 10 per cent oversupply requirement and providing certainty for Western Australian and Northern Territory exporters with limited or no connection to the east coast market.
The Government's own analysis acknowledges the scheme could reduce gas production and investment, raising further concerns about the legislation's potential impact on Australia's long-term energy security.
"This is the third major intervention in the east coast gas market in almost as many years, and it is critical for all market participants that we get it right this time.
"We welcome the Coalition’s recognition that the bill should not be passed without addressing industry concerns and encourage both parties to work constructively to deliver a scheme that strengthens energy security and delivers lasting benefits for Australian households and businesses."
